Bitcoin On-Chain Analysis Basic Concepts - CDD

If you want to use on-chain data to judge "whether the market is moving old coins out to spend", CDD is a very useful indicator. It doesn't look at transaction volume alone, but: exactly how many old coins that have been dormant for a long time are being spent.

What is CDD?

Coin Days Destroyed is a commonly used on-chain data indicator (especially common in Bitcoin analysis), used to measure: how many long-term holders (LTH) coins are being moved.

Unlike regular "transaction volume", which treats every transfer as equally important, CDD weights coins based on how long they have been dormant (unspent) in the wallet. Simply put: the longer a coin has been unmoved, the more "weight" it carries once spent.

How It Works (with formula)

Every day a coin sits idle in a wallet, it accumulates 1 coin day. When the coin is finally transferred or spent, the accumulated coin days are reset to zero — meaning they are "destroyed".

Coin Days Destroyed = number of coins moved × days dormant

### Example (super intuitive)

- Example A: Moving 1 BTC that has been dormant for 100 days → destroys 100 coin days.

- Example B: Moving 100 BTC that were only bought yesterday (held for just 1 day) → also destroys 100 coin days.

Key point: CDD doesn't just look at how many coins are moved, but how old the moved coins are.

Why Does CDD Spike?

When you see a CDD spike, it usually means coins dormant for a long time are being spent — i.e., the coin age of spent UTXOs has suddenly increased.

Common reasons generally fall into these four categories (they may occur individually or in combination):

### 1) Long-term holders become active (reallocating or distributing)

• Coins dormant for months or even years are moved.
• This could be distribution (selling into market liquidity), or simply old coins being reallocated: changing wallets or strategies, not necessarily selling immediately.
• Historically, CDD peaks often coincide with local tops. Rising CDD may indicate increasing selling pressure.

### 2) Exchange-related flows (old coins entering exchanges)

• Once old coins are transferred to exchanges, CDD rises significantly.
• If the spike coincides with rising exchange inflow or increased LTH Realized Profit, pay extra attention: it may indicate distribution into the market.

### 3) Large UTXO consolidation / wallet migration

• This could be operational: consolidating many small, older UTXOs into fewer transactions, or migrating funds to a new wallet.
• Even if not for selling, the on-chain footprint still shows "old coins being spent", so CDD jumps.

### 4) Liquidity events pulling old coins back into the market

• Sharp volatility may prompt long-term holders to move assets (profit-taking, hedging, or liquidity needs).
• The key is not necessarily the price itself, but that older supply is starting to be spent.

In summary, CDD serves as a warning light for "whether old coins are showing unusual movement". When the value suddenly amplifies, first suspect that long-term coins are being moved, then use exchange inflows and profit indicators like SOPR to distinguish between distribution, wallet reorganization, or other liquidity needs. Next, we will continue explaining SOPR.